Both Williams Firms Tap Strong Q1 Returns

Both Williams Firms Tap Strong Q1 Returns

Thursday, May 05, 2011
Tulsa World, Okla.
by Rod Walton

Williams Cos. Inc. and Williams Partners LP both exceeded $300 million in profits for 2011's first quarter, the Tulsa natural gas, oil and natural gas liquids firms reported Wednesday.

Higher NGL margins sparked the strong returns for the three months ending March 31. Parent Williams tapped $321 million, or 54 cents per share, in net income while Williams Partners totaled $307 million, or 81 cents per unit, in profit.

"We're off to a good start this year, and we're expecting an even stronger performance for the remainder of 2011 and 2012," Alan Armstrong, president and chief executive officer, said in a statement. "We've increased our earnings guidance 11 percent for both years, as we expect strong NGL and olefin margins in our midstream businesses."

Williams Cos. net income was a dramatic increase over 2010's first quarter, when the company announced a $195 million net loss. Williams Partners' total was down slightly from the $322 million same time last year, but 33 percent higher on a per-unit basis, according to the release.

The traditionally natural gas-rich Tulsa company has upped its stake in oil and NGL plays in the past year due to higher prices and increased demand for ethane for use in petrochemical production. Williams has $4.8 billion in growth capital projects planned through 2012.

"We continue to invest in and bring more value-adding natural gas and NGL infrastructure projects online," Armstrong added. "With abundant supplies in the new shale plays and growing demand from natural gas-fired electrical generation, the need for natural gas infrastructure will continue to grow."

Williams Cos. is focused on infrastructure, exploration and production although a new subsidiary, WPX Energy Inc., will spin off the E&P segment in the near future. Williams Partners handles natural gas and NGL gathering, transport and processing assets.

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Transocean Reports Q1 Financials

Transocean Reports Q1 Financials


Transocean Ltd.

Transocean Ltd. on Wednesday reported net income attributable to controlling interest of $310 million, or $0.96 per diluted share, for the three months ended March 31, 2011. The results compare to net income attributable to controlling interest of $677 million, or $2.09 per diluted share for the three months ended March 31, 2010.

First quarter 2011 results included the following items, after tax, that resulted in a net positive impact of approximately $139 million, or $0.43 per diluted share:

-- $176 million of income from discontinued operations, nearly all of
which is from the gain on the sale of the Trident 20,
-- $9 million from the gain on the sale of the Transocean Mercury,
-- $8 million of net charges related to litigation matters not associated with the Macondo well incident, and
-- $38 million of net charges primarily related to discrete tax items.


First quarter 2011 results also included expenses associated with the Macondo well incident of $23 million, $19 million after tax, or $0.06 per diluted share. These expenses were primarily related to increased insurance premiums and legal costs.

Operations Quarterly Review

Revenues for the three months ended March 31, 2011 were $2.144 billion, compared to revenues of $2.127 billion during the three months ended December 31, 2010. First quarter contract drilling revenues were impacted by lower utilization and revenue efficiency. Our Deepwater and Midwater Floater fleets experienced lower utilization due to the stacking of rigs, as well as increased shipyard time related to contract preparation, special periodic surveys and major maintenance projects. Compliance with new well control equipment certification requirements, higher standards for equipment condition and capacity constraints on our vendors contributed to reduced revenue efficiency among our Ultra-Deepwater and Deepwater Floaters. Partially offsetting lower contract drilling revenue was additional revenue from two newbuild rigs commencing operations. Other revenues increased primarily from additional drilling management services activity.

Operating and maintenance expenses totaled $1.359 billion for the first quarter 2011, up slightly from $1.339 billion for the prior quarter. The change was due to increased drilling management services activity, which was partially offset by reduced rig-related maintenance costs.

Depreciation and amortization expense was $354 million in the first quarter 2011 compared to $381 million in the prior quarter. The $27 million decrease was primarily due to the reduced carrying amounts of our Standard Jackups resulting from the approximately $1 billion asset impairment recognized on that asset group during the fourth quarter 2010.

Liquidity and Interest Expense

Interest expense, net of amounts capitalized for the first quarter 2011, was $145 million, compared to $152 million in the fourth quarter 2010.

Cash flow from operating activities decreased to $390 million for the first quarter 2011 compared to $796 million for the fourth quarter 2010. The decline in cash flow from operations resulted primarily from an increase in working capital.

Effective Tax Rate

Transocean's Annual Effective Tax Rate(1) for the first quarter 2011, which excludes various discrete items, was 19.3 percent. The Effective Tax Rate(2) for the first quarter was 33.1 percent, primarily reflecting the impact of discrete items resulting from changes in estimates.

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Statoil Posts Stronger Q1 Profit

Statoil Posts Stronger Q1 Profit

Wednesday, May 04, 2011
Deutsche Presse-Agentur (dpa)

Norwegian energy giant Statoil's first-quarter net income increased 44 percent driven by higher gas and oil prices, the group said Wednesday.

Net income for the quarter was 16.1 billion kroner (3 billion dollars) compared to 11.1 billion kroner in the corresponding business period 2010.

Revenues in the quarter were 151 billion kroner, up 17 percent year-on-year, the state-controlled group said.

Statoil said its average daily oil and gas output was some 1.9 million barrels of oil equivalent per day during the quarter, a 6 percent drop in production year-on-year but in line with its expectations.

The average first-quarter oil price measured in kroner was up 33 percent year-on-year, while the average natural gas price was 20 percent higher measured in the Norwegian currency, the group said.

For 2011, Statoil said it predicted production to be at the same level or slightly below the 2010 level.

The group said it had made important discoveries off Norway and in Brazil, and had received permits to drill two exploration wells in the Gulf of Mexico.

During the quarter the group drilled 10 exploration wells, including three outside the Norwegian continental shelf. Three of the wells resulted in discoveries, Statoil said.

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Pa. Revenue Agency: Q1 Tax Payments Already Beat 2010 Totals

Pa. Revenue Agency: Q1 Tax Payments Already Beat 2010 Totals

Tuesday, May 03, 2011
Pennsylvania Department of Revenue

At the direction of Governor Tom Corbett, the Department of Revenue on Monday released an analysis showing that companies engaged in and related to natural gas drilling activities in Pennsylvania have paid more than $1.1 billion in state taxes since 2006.

Those taxes came on top of the billions of dollars of infrastructure investments, royalty payments and permit fees paid by the industry.

The Revenue Department's analysis, which breaks out tax payments from oil and gas companies and their affiliates through April 2011, indicates that 857 of these companies have already paid $238.4 million in capital stock/foreign franchise tax, corporate net income tax, sales/use tax and employer withholding to the state in 2011.

These figures from the first quarter of this year already exceed by nearly $20 million the total tax payments made in all of 2010.

The department's analysis also identified $214.2 million in personal income taxes paid since 2006 attributable to Marcellus Shale lease payments to individuals, royalty income and sales of assets.

A comprehensive analysis of personal income tax paid on Marcellus Shale business profits is not feasible because the department cannot conclusively determine what profits from Marcellus Shale partnerships, S corporations and LLCs were passed through to individuals as opposed to C corporations, which are taxed at 3.07 percent and 9.99 percent, respectively.

However, the department can determine that these oil and gas companies, and their affiliates, include 1,096 pass-through businesses. These businesses reported $675.4 million in 2008 income.

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Cobalt Posts Smaller Loss for Q1

Cobalt Posts Smaller Loss for Q1

Tuesday, May 03, 2011
Cobalt International Energy, Inc.

Cobalt International Energy, Inc. on Tuesday announced a net loss of $16.1 million, or $0.05 per basic and diluted share for the first quarter of 2011, compared to a net loss of $29.7 million, or $0.09 per basic and diluted share, for the first quarter of 2010.

Cash expenditures (excluding changes in working capital) for the quarter ended March 31, 2011 were approximately $11 million compared to guidance of $20 25 million. For the full year 2011, expected cash expenditures (excluding changes in working capital) including the cash expenditures associated with Block 20 offshore Angola are $325 to 400 million. The range depends principally on when Cobalt recommences Gulf of Mexico drilling activities in the second half of 2011, and the testing and appraisal expenditures associated with any discoveries offshore Angola.

Cash, cash equivalents and investments at the end of the first quarter were approximately $843 million. This excludes approximately $349 million designated for future operations held in escrow and collateralizing letters of credit, as well as approximately $196 million in the TOTAL drilling fund for the Gulf of Mexico. In addition to these balances, Cobalt closed a common stock offering on April 15, 2011, which resulted in total gross proceeds to Cobalt before underwriting discounts and offering expenses of $499.1 million. Cobalt has no short or long-term debt. Including the proceeds from the offering, Cobalt holds cash, cash equivalents and investments of over $1.67 billion which Cobalt expects will be sufficient to fund its planned exploration and appraisal program, including expenditures relating to Block 20 offshore Angola, through the end of 2013.
Cobalt is an independent oil exploration and production company focusing on the deepwater U.S. Gulf of Mexico and offshore Angola and Gabon. Cobalt was formed in 2005 and is headquartered in Houston, Texas.